KNOWLEDGE BASE Contest Prize Promotion Law Netherlands

 

Contests and Prize Promotions Laws in the Netherlands

 

Prize promotions (also known as free prize drawings and sweepstakes) and competitions (referred to here as contests) can be invaluable for your business, particularly a new or startup business. There are many reasons your should consider a prize promotion or competition. Prize promotions and competitions can:

  • create ‘buzz’ around your product or service;

  • encourage people to visit your website;

  • help to expand your email list;

  • provide you with valuable market research;

  • strengthen the relationship between you and your customers.

 

What laws and regulations apply?

The Betting and Gaming Act, the Code of Conduct for Promotional Games of Chance, and the Consumer Protection Enforcement Act of 29 December 2006 regulate prize promotions and contests in the Netherlands.

 

Skills contests

Skills contests are permitted as long as the winner is chosen based on skill and not by chance. Examples of a “skill” include: drawing a picture or answering a riddle or qualified questions.

 

Prize promotions

Prize promotions are permitted when there is an element of chance in the selection of the winner and a prize is awarded. The prize promotion must be done for the promotion of products, services, brands, or companies and:

  • There is an element of chance;

  • participants do not pay to enter, with the exception of communication costs of up to €0.45 per participant;

  • participants do not have an overwhelming influence on the winning of free prizes;

  • the marketing and terms and conditions are not misleading, incomplete, or give rise to false expectation, and are made available free of charge; and

  • the only purpose of the promotion is not to collect the personal data of the participants.  It has to be for product, service, or brand promotion, and the collection of the personal data of participants can only be an additional benefit. 

The selection of any winner should be impartial, communicated within three months, and a list of winners should be made available. The total value cannot exceed €100,000 per year. All promised prizes must actually be paid out.

Furthermore, the Code of Conduct for Promotional Games of Chance set out specific rules that distinguish between ‘small promotional games of chance’ with a prize value of less than €4,500 and ‘normal promotional games of chances’. The promotion of a product, service, or company can be done at most 20 times per year, that is, the maximum number of winners per year is 20. However, small promotions games of chance can be organized as often as the promoter would like.

 

Advertising contests and promotions

Under the Code of Conduct for Promotional Games of Chance, advertisements for prize promotions and contests in print and electronic media must contain at least the following:

  • The name and address of the organizer of the promotion or contest;

  • the number of prizes available with a description from which their monetary value is known or can be easily derived;

  • the submission deadline;

  • any exclusions or disqualifications from participation;

  • the date and manner in which the results will be announced; and

  • in the event special conditions apply to be able to participate in the contest, a short description of those conditions.

Prize promotion and contest advertisements should not be aimed at minors or in locations that many minors are likely to be. If minors are qualified to enter the promotion, parental consent is required.

 

Taxes

Promoters and prize winners may be liable for taxes on the value of the prize. The tax rate for promoters is a percentage of the value of the prize. The tax for prize winners is 29% of the value of the prize. There is no tax liability for prize valued under €454.

 

What are the risks of noncompliance?

A violation can result in a fine of up to €780,000 or 10% of a company’s annual turnover of the year preceding the year in which the violation was committed.    

KNOWLEDGE BASE Contest Prize Promotion Law Netherlands